What Has Gone So Awry at Zipcar – Is the UK Vehicle-Sharing Market Dead?
The volunteer food project in Rotherhithe has been delivering hundreds of prepared dishes weekly for two years to elderly residents and needy locals in southeast London. Yet, their operations have been thrown into disarray by the announcement that they will lose cars and vans on New Year’s Day.
This organization had relied on Zipcar, the app-based vehicle rental service that allowed its fleet of vehicles from the street. It sent shockwaves across London when it said it would cease its UK business from 1 January.
This means many volunteers will be unable to pick up supplies from the Felix Project, that collects excess produce from grocery stores, cafes and restaurants. Other options are less convenient, costlier, or lack the same flexible hours.
“It’s going to be affected massively,” stated Vimal Pandya, the community kitchen’s founder. “Personally me and my team are worried about the operational hurdle we will face. A lot of people like ours are going to struggle.”
“Faced with this reality, everyone is concerned and thinking: ‘How will we continue?’”
A Major Blow for City Vehicle Clubs
The community kitchen’s drivers are among more than half a million people in London registered as car club members, now potentially left without convenient access to vehicles, without the hassle and cost of ownership. The vast majority of those members were probably with Zipcar, which had a near-monopoly position in the city.
The planned closure, pending consultation with staff, is a serious setback to the vision that car sharing in cities could cut the need for private vehicle ownership. However, some analysts also suggested that Zipcar’s exit need not spell the end for the idea in Britain.
The Potential of Shared Mobility
Car sharing is prized by many urbanists and environmentalists as a way of mitigating the problems associated with vehicle ownership. Typically, vehicles sit idle on the side of the road for 95% of the time, occupying parking. They also involve large carbon emissions to produce, and people without a vehicle tend to walk, cycle and take public transport more. That benefits cities – easing congestion and pollution – and boosts people’s health through increased activity.
Understanding the Decline
The company started in 2000 before being bought by the US car rental group Avis Budget in 2013. Zipcar’s UK revenues were minimal compared with its parent company's total earnings, and a loss that grew to £11.7m in 2024 gave no reason to continue.
The parent company stated the closure is part of a “broader transformation across our international business, where we are taking targeted actions to streamline operations, enhance profitability”.
Its latest financial reports said revenues had declined as drivers took fewer and shorter trips. “These changes reflect the continuing effect of the cost-of-living crisis, which continues to suppress demand for non-essential services,” it said.
London's Unique Challenges
Yet, several experts noted that London has specific problems that made it difficult for the company and its rivals to succeed.
- Inconsistent Rules: Across 33 boroughs, car-club operators face a mosaic of different procedures and costs that made it harder.
- Congestion Charge: The closure coincides with electric cars start paying London’s congestion charge, adding unavoidable costs.
- Parking Permit Disparity: Residents in some boroughs pay as little as £63 for a year’s electric car parking permit. A similar shared vehicle would pay over £1,100 per year, creating a major disincentive.
“Our fees should be one-twentieth of a resident’s permit,” argued Robert Schopen of Co Wheels. “We remove vehicles. We’re putting less polluting cars in their place.”
A European Example
Nations in Europe offer examples for London to follow. Germany enacted national car-sharing legislation in 2017, providing a unified system for parking, support and exemptions. Now, the country has several shared cars per 10,000 people, while France has 2.1 and Belgium has 6.3. The UK lags behind at 0.7.
“The evidence shows is that car sharing around the world, especially in Europe, is expanding,” said Bharath Devanathan of Invers.
He suggested authorities should start to treat car sharing as a form of public transport, and link it with train and bus stations. He added that a potential operator was already seriously considering entering the London market: “There will be fill this gap.”
What Comes Next?
The company’s competitors can roughly be divided into two models:
- Fleet Operators: Which maintain their own cars. Examples Denmark’s GreenMobility, France’s Free2Move, and Germany’s Miles Mobility.
- Peer-to-Peer Services: Which allow users to hire out their own vehicles via an app – a kind of Airbnb for cars. Examples Britain’s Hiyacar and the US’s Getaround and Turo.
One company, a US-headquartered peer-to-peer platform, is assessing the UK gap. Rory Brimmer, its UK managing director, said there was a “significant chance” to win more users. “There is a void that is going to need to be filled, because London still needs to move,” Brimmer said.
However, it could take a while for other players to build momentum. In the meantime, more people may feel forced to buy cars, and many across London will be without a convenient option.
For the volunteers in Rotherhithe, the next month will be a scramble to find a solution. The logistical challenge caused by Zipcar’s exit highlights the wider implications of its departure on community groups and the future of shared mobility in the UK.
